NEW YORK (Dow Jones)--Crude futures rose Wednesday after a government report showed U.S. gasoline demand last week hit a 10-month high amid rising confidence in the consistency of the economic recovery.

Light, sweet crude for July delivery settled 73 cents, or 1%, higher at $77.67 a barrel on the New York Mercantile Exchange, its highest close since May 10.

Brent crude for August delivery on the ICE futures exchange closed $1.04, or 1.35% higher, at $78.14 a barrel.

In the absence of consistently negative economic indicators, prices are up more than $7 a barrel since June 7.

U.S. gasoline demand rose by 144,000 barrels a day on the week, to 9.338 million barrels a day, according to a U.S. Energy Information Administration report covering the week ended June 11. This is the most since Aug. 28. 2009, and may suggest that the seasonal increase in U.S. gasoline consumption is taking hold as summer vacationing begins.

Gasoline inventories, forecast to remain unchanged, declined by 636,000 barrels. Crude-oil stockpiles, on the other hand, posted a surprise gain of 1.69 million barrels. Front-month July reformulated gasoline blendstock, or RBOB, settled 2.37 cents, or 1.12% higher, at $2.1452 a gallon, its highest close since May 13.

An unexpected rise in the widely watched crude-oil statistics can pressure prices, but participants were looking beyond supply-and-demand fundamentals to the broader global economy.

"We had a soft number as far as inventories were concerned, but I don't think that really matters right now," said Rich Ilczyszyn, senior market strategist at Lind-Waldock in Chicago. "People are thinking forward."

If equities markets strengthen and the sovereign debt concerns in Europe ease, oil prices could approach this year's highs of above $85 a barrel. The furor over Europe's plans to bail out struggling euro zone countries has abated, as has the plunge in the euro. Although the euro slipped to $1.2304 on Wednesday, the common currency remained well above the four-year low reached last week. A strengthening euro gives buyers on the Continent an enhanced ability to bid up oil prices.

"In general, you've just got the risk trade back on right now," said Matt Zeman, president of trading at LaSalle Futures Group in Chicago. "People are feeling a little bit better about the economy. The biggest thing is that the euro zone contagion thus far is not spreading."

The U.S. stock market also provided support, flipping into positive territory during intraday trading. The Dow Jones Industrial Average, however, ended the day's trading largely flat.

"If equities right themselves, if the euro rebounded a little bit ... I think we could trade out above $80," Ilczyszyn said.

July heating oil settled 4.16 cents, or 2.01% higher, at $2.1101 a gallon.

-By Matt Day, Dow Jones Newswires; 212-416-4986;